Consider a Floating-Strike Lookback Put Option Written on a Stock $S ^ { \max }$

question 14

Multiple Choice

Consider a floating-strike lookback put option written on a stock. Let $S ^ { \max }$ and $S ^ { \min }$ denote the maximum and minimum prices of the stock over the option's life. Then, the payoff to the option holder is given by $\max \{ X - Y , 0 \}$ , where

• A) \(X = S ^ { \max }\) and \(Y = K\) , the given strike price of the option.
• B) \(X = K\) and \(Y = S ^ { \min }\) .
• C) \(X = S ^ { \max }\) and \(Y = S _ { T }\) , the price of the underlying at maturity.
• D) \(X = S _ { T }\) and \(Y = S ^ { \min }\) .

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